Monetary Poverty Estimates in Sri Lanka: Selected Issues

Gunetillke, Neranjana; Senanayake, Dinushka Working Paper Monetary Poverty Estimates in Sri Lanka: Selected Issues ERD Working Paper Series, No. 58 Provided in Cooperation with: Asian Development Bank (ADB), Manila Suggested Citation: Gunetillke, Neranjana; Senanayake, Dinushka (2004) : Monetary Poverty Estimates in Sri Lanka: Selected Issues, ERD Working Paper Series, No. 58, Asian Development Bank (ADB), Manila, https://hdl.handle.net/11540/1915 This Version is available at: https://hdl.handle.net/10419/109255 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. http://creativecommons.org/licenses/by/3.0/igo 27ERD WORKING PAPER SERIES NO. 58 ERD Working Paper No. 58 Monetary Poverty Estimates in Sri Lanka: Selected Issues NERANJANA GUNETILLEKE AND DINUSHKA SENANAYAKE October 2004 Neranjana Gunetilleke is a development economist and coordinates the Poverty Impact Monitoring Programme at the Centre for Poverty Analysis; Dinushka Senanayake is a junior professional at the Centre for Poverty Analysis. This paper was originally written for RETA 5917: Building a Poverty Database, Economics and Research Department. The authors wish to thank Shakeela Fahim of the Centre for Poverty Ananlysis for assistance in data consolidation. Asian Development Bank P.O. Box 789 0980 Manila Philippines ©2004 by Asian Development Bank October 2004 ISSN 1655-5252 The views expressed in this paper are those of the author(s) and do not necessarily reflect the views or policies of the Asian Development Bank. FOREWORD The ERD Working Paper Series is a forum for ongoing and recently completed research and policy studies undertaken in the Asian Development Bank or on its behalf. The Series is a quick-disseminating, informal publication meant to stimulate discussion and elicit feedback. Papers published under this Series could subsequently be revised for publication as articles in professional journals or chapters in books. ABBREVIATIONS CBN Cost of Basic Needs CBSL Central Bank of Sri Lanka CFS Consumer Finances and Socio-Economic Surveys DCI Direct Calorie Intake DCS Department of Census and Statistics FEI Food Energy Intake HIES Household Income and Expenditure Survey LFS Sri Lanka Labor Force Survey CONTENTS Abbreviations vii Abstract ix I. INTRODUCTION 1 II. DATA SOURCES 2 A. Department of Census and Statistics 2 B. Central Bank of Sri Lanka 3 C. Other Sources 3 III. MEASURING POVERTY 4 A. Poverty Lines for Sri Lanka 4 B. Calculating Poverty Lines: Choice of Methods 6 C. Poverty Incidence 8 D. Characteristics of the Poor 12 E. Causes of Poverty 12 IV. DISTRIBUTION 13 A. Income Shares by Decile 13 B. Sectoral Distribution 15 C. Consumption Distribution 15 V. NONINCOME INDICATORS 16 A. Education 16 B. Health and Nutrition 17 C. Employment 17 VI. CONCLUDING REMARKS 17 APPENDIX: Department of Census and Statistics: Official Poverty Line for Sri Lanka 19 REFERENCES 24 ABSTRACT This paper provides an introduction to poverty-related data available in Sri Lanka and monetary measurements of poverty carried out using this data. The lack of an official poverty line in Sri Lanka until June 2004 has over time generated a number of poverty lines and corresponding poverty measures. While these poverty measures have provided a good base for poverty analysis, the paper also touches on the problems generated by the use of multiple methods. The release of the official poverty line by the Department of Census and Statistics can be seen as a major step forward in the debate on poverty measurement in Sri Lanka. I. INTRODUCTION Sri Lanka’s impressive social achievement in the midst of modest economic performance has made it a subject of interest both nationally and internationally. Sri Lanka is a popular case study in the “growth vs. welfare” literature as well as in the subsequent “adjustment with a human face” debate. Interest in the country did not wane even when it shifted policy in the late 1970s from welfare orientation to growth orientation, but continued to address issues faced by disadvantaged sectors of society. When international interest thus turned to poverty alleviation in the 1980s, the Government of Sri Lanka already had decades of experience in addressing the issue at both a policy and implementation level. The focus of this paper is on poverty-related data and corresponding measurements available in Sri Lanka, including estimates of poverty carried out using this data.1 The paper aims to provide an introduction into the monetary estimates of poverty in Sri Lanka and the data available to carry out these estimates. Some issues such as the methods of calculating the poverty line are discussed in greater depth than others, such as the human development indicators of poverty. It must be highlighted that there has been a high level of dynamism among the institutions involved in poverty data and poverty measurement during the last few years. The Department of Census and Statistics (DCS) and the Central Bank of Sri Lanka (CBSL), as the two major sources of data, have been in close dialog along with other related professionals in relation to improving the database and addressing the gap left by the lack of an official poverty line. The DCS is tasked with the responsibility of developing the official poverty line. The remainder of this paper is organized as follows. Section II provides a discussion of the key data sets that are produced by various government agencies in Sri Lanka and provide pertinent information on not only poverty, but economic activity of the poor and nonpoor. Section III covers poverty-related issues, including measurement and poverty estimates. It also provides, in brief, a poverty profile and discusses some of the causes of poverty. Section IV describes the nature of distribution in incomes and consumption expenditures as captured by household survey data. Section V concerns itself with nonincome indicators related to poverty. Finally, Section VI concludes. 1This paper was initially prepared as a background paper to inform the discussion at the Inception Workshop of Building a Poverty Database (RETA 5917). While the paper has been updated from its initial form presented in July 2001, it must be noted that the paper was finalized as the official poverty line and the related incidence of poverty was made public by the Department of Census and Statistics in June 2004. This information has been included in Appendix 1. 8OCTOBER 2004 MONETARY POVERTY ESTIMATES IN SRI LANKA: SELECTED ISSUES NERANJANA GUNETILLEKE AND DINUSHKA SENANAYAKE C. Poverty Incidence 1. Headcount Index Though there seems to be no agreement regarding the definition of poverty and poverty lines in Sri Lanka, there is broad consensus regarding the basic trend and nature of poverty. It is generally accepted that poverty levels show a falling trend with approximately 25 percent of the population facing conditions of consumption poverty, as of the late 1990s. In terms of sectoral variance, poverty has been consistently highest in the rural sector and lowest in the urban sector. While the estate sector has a lower incidence of consumption poverty than the rural sector, qualitative studies have shown that the estate sector faces higher levels of human and social deprivation as estate populations have lower education achievements, less access to health care, greater housing density, etc. TABLE 5 VARYING POVERTY LINES AND ESTIMATES OF POVERTY IN SRI LANKA INCIDENCE OF POVERTY SRI DATA SOURCE STUDY LANKA URBAN RURAL ESTATE POVERTY LINE LFSS (DCS 1970) Bhalla and 11.2 5.0 12.8 11.1 Per capita food expenditure Glewwe (1986) Rs. 70 per month at 1978/79 prices CFS (CBSL 1973) Anand and 27.6 22.7 31.6 8.1 Per capita food expenditure Harris (1985) Rs. 70 per month at 1978/79 prices CFS (CBSL 1983) Anand and 12.3 14.3 12.8 3.6 Per capita food expenditure Harris (1985) Rs. 60 per month at 1978/79 prices CFS (CBSL 1983) Gunaratne 22.3 19.4 25.0 7.6 Per capita food expenditure (1985) Rs. 70 per month at 1978/79 prices LFSS (DCS 1985/86) Korale (1987) 39.4 27.6 45.7 5.7 Average household income per month needed to meet minimum nutrition (2,200 cal) and basic needs: Urban Rs. 1920, Rural Rs. 1610, Estate Rs. 1451 LFSS (DCS 1985/86) Datt and 27.33 16.43 31.67 14.31 Lower poverty line: Rs. 471.20 Gunewardena per person per month in 1990/91 (1997) prices 40.6 26.78 45.48 30.85 Higher poverty line: Rs. 565.44 per person per month in 1990/91 prices (continued next page) 9ERD WORKING PAPER SERIES NO. 58 TABLE 5 (CONTINUED) INCIDENCE OF POVERTY SRI DATA SOURCE STUDY LANKA URBAN RURAL ESTATE POVERTY LINE HIES Datt and 22.36 18.31 24.41 12.62 Lower poverty line: Rs. 471.20 (DCS 1990/91) Gunewardena per person per month in 1990/91 (1997) prices 35.34 28.43 38.05 27.51 Rs. 565.44 per person per month in 1990/91 HIES Gunewardena 25.17 14.67 26.95 24.92 Adjusted food poverty line (DCS 1995/96) (2000) Rs. 791.67 per person per month Lower poverty line Higher poverty 39.2 24.94 41.33 45.32 20% higher than the lower poverty line line. Food poverty line Rs. 950.00 per person per month HIES Vidyaratne and (DCS 1995/96) Tilakaratne8 (2003) 39.1 21.0 22.3 19.6 Rs. 953 per person per month CFS Pradhan (1999) 18.9 10.9 20.3 17.5 Adjusted food poverty line (CBSL 1996/97) Rs. 860.00 per person per month HIES DCS (2002) 27.9 9.7 31.0 27.9 Rs. 1294 per adult equivalent (DCS 2002) per month HIES (various) DCS (2004) See Annex 1 Sources: Derived from Lakshman (1998), Tudawe (2000), and sources as cited. 2. Regional Disparities Table 6 carries the household incidence of poverty as measured by the HIES 2002. The table indicates the downward trend of poverty not just at the national level but also at the sectoral, provincial, and district levels. As previously mentioned, the Final Report of the HIES 2002 does not include estimates of poverty for the North East. However, the DCS is in the process of estimating such figures and the release of such data is anticipated in the very near future. By 2002, the poverty incidence among households at the national level was down to 23.9 percent, from 26.7 percent in 1995/96 and 30.4 percent in 1990/91. 8The incidence of poverty for the three sectors is based on the food poverty lines, not the total poverty line. SECTION III MEASURING POVERTY 10 OCTOBER 2004 MONETARY POVERTY ESTIMATES IN SRI LANKA: SELECTED ISSUES NERANJANA GUNETILLEKE AND DINUSHKA SENANAYAKE At the provincial level, the same improvement in the poverty situation can be seen. All provinces experienced a reduction in the percentage of poor households from 1990/91 to 2002. The same observation can be made with respect to all districts with the exception of the Hambantota and Ratnapura districts, which experienced an increase in the levels of poverty from 1990/91 to 2002. TABLE 6 PERCENTAGE OF POOR9 HOUSEHOLDS BY AREA AND BY SURVEY PERIOD AREA 1990/91 1995/96 2002 Sri Lanka 30.4 26.7 23.9 Sector Urban 18.2 13.4 7.9 Rural 34.7 28.7 26.4 Estate 20.5 26.1 22.1 Province Western 20.1 12.2 12.2 Central 33.5 35.4 25.6 Southern 32.6 32.5 26.2 North Western 33.6 30.4 28.3 North Central 39.0 26.1 29.3 Uva 38.1 33.9 36.4 Sabaragamuwa 36.7 40.0 34.7 District Colombo 16.4 9.0 5.9 Gampaha 17.9 11.4 13.8 Kalutara 31.2 20.3 21.8 Kandy 37.4 36.3 25.7 Matale 36.6 45.7 31.1 Nuwara Eliya 22.6 28.7 21.7 Galle 30.7 32.1 17.8 Matara 32.2 34.8 29.5 Hambantota 36.8 30.3 37.8 Kurunegala 35.3 29.5 30.5 Puttalam 29.2 32.5 23.6 Anuradhapura 41.1 25.6 29.5 Polonnaruwa 34.1 27.3 29.0 Badulla 38.8 27.1 37.7 Monaragala 36.5 47.7 33.8 Ratnapura 31.6 44.1 37.4 Kegalle 42.2 35.5 31.5 Source: Preliminary Report Household Income and Expenditure Survey 2002 (DCS various years). 9The DCS calculates the poverty line by using a modification of the CBN method. The poverty line is calculated as Rs. 1338.48 per adult equivalent per month 11ERD WORKING PAPER SERIES NO. 58 The sectoral analysis shows that poverty has remained a mainly rural phenomenon over the decades. Around 90 percent of the poor lived in the rural sector in 2002, in contrast to 5 percent each in the urban and estate sectors. In terms of trends, the declining trend in poverty is clearly evident in the urban as well as rural sectors while a mixed trend is observed in the estate sector, with a rise in poverty from 1990/91 to 1995/96 and a decline in poverty over the next 5 years. Vulnerability to fluctuations is highest in the rural sector, where a large share of the population is engaged in agriculture, which is subject to seasonality. Regional disparities in poverty in Sri Lanka are reflected by the large gaps between the districts with the highest and lowest incidence of poverty. The regions that display high levels of poverty are also those with low access to publicly provided services and hence low achievements in human development indicators. While there are no formal quantitative calculations on the incidence of poverty in the North East, the Poverty Reduction Framework (2000) estimated the incidence of poverty to range between 25-55 percent. The lower limit was based on the preliminary findings of the World Bank’s Integrated Survey, which shows that poverty in the cleared areas of the North and East are similar to the national levels of poverty (25 percent), and the upper limit assumes that poverty in those regions are as high as the poorest province (Uva Province) in the country (World Bank 2000). While the above estimates look purely at consumption poverty, it has been recognized that poverty in the North and East is of a different nature to the rest of country and should be measured in its multidimensional form. Loss of livelihoods, destruction of physical and social capital, forced displacement, uncertainty, trauma, and reliance on relief are some of the facets of poverty that are unique to this region. Sarvananthan (2003) carries various socioeconomic data, which verify the fact that deprivation is greater in the strife-affected regions than in the rest of the country. Only 40 percent of households in the East and 22 percent of the households in the North have access to electricity, as against the national rate of 56 percent. Households with access to a safe water supply in the North and East are 20 percent, well below the national rate of 45 percent. While the above data indicates the lack of economic infrastructure in the regions, indicators of health care and education show that the region’s social infrastructure faces a similar situation. While secondary data on education in the region is extremely limited one could assume a significant deterioration in education over the past two decades. Recruitment of child soldiers, displacement, constant disruptions to schooling due to fighting and hartals are some of the reasons for the high school dropout rates; 15 percent as against 4 percent in the rest of the country. Furthermore, destruction of infrastructure and occupation of schools by armed forces throughout the region also severely hampered education standards (UN 2003). Low birth weight in the North and East is 25.7 percent, home births are 19.4 percent, and infant mortality10 is 14.7, while the national figures for the indicators are 16.7, 4.0, and 15.4 percent, respectively. Although infant mortality in the North and East is slightly better than the national rate, it should be emphasized that Jaffna, Kilinochchi, Mullaitivu, and Mannar districts (in the Northern Province) fared much worse, with infant mortality rates ranging from 20.3 to 27.8. 10 Infant mortality is measured as the number of deaths per 1,000 live births. SECTION III MEASURING POVERTY 12 OCTOBER 2004 MONETARY POVERTY ESTIMATES IN SRI LANKA: SELECTED ISSUES NERANJANA GUNETILLEKE AND DINUSHKA SENANAYAKE D. Characteristics of the Poor From the statistical information obtained from various sources, a typical characterization of a poor household is one that is employed in low skill occupations, has diversified income sources, lacks ownership or access to productive assets, has only primary school level of education, could belong to any ethnic group, and has a large average household size and a high dependency ratio. This typical profile has not changed dramatically in the last three decades. However, there are certain groups that make it necessary to go beyond the basic characterization of a poor household. The elderly is one such group as Sri Lanka’s high achievements in human development in life expectancy and low population increase has created a population pyramid that resembles that of high income economies; a young generation at the base and a rapidly aging population at the top. The existence of a growing population of the elderly will make increasing demands on the country’s welfare program. Notwithstanding the high rates of consumption poverty in Sri Lanka, there is very little abject poverty—in terms of starvation and destitution—in the country. However, there are specific pockets within the population that do fall into this category, and are termed chronically poor. Displaced households, households in conflict areas, unemployed estate workers, households in isolated villages, and marginalized social groups fall into the category of chronically poor. Although the first three groups have received considerable recognition in the policy arena in recent years, the latter two have received little attention. E. Causes of Poverty A range of factors have been identified in the literature as causes of poverty in Sri Lanka. These causes, which have changed little over time, relate mainly to constraints in agriculture (weak marketing structures, low productivity, imperfect property rights, small farm size, shortfalls in access to water especially in the nonirrigated areas of the dry zone); rural industry (limited access and utilization of technology, poor production and quality standards, high capital costs, raw material and product marketing bottlenecks); infrastructure (shortfalls in physical infrastructure such as energy, communications, all weather roads); weak access to employment opportunities (youth unemployment, differential regional growth); and weak access to public services (lack of transport facilities, low quality of education and health care provision). But perhaps the most critical factor in the well-being of the Sri Lankan nation is the ongoing secessionist conflict. It has a devastatingly impoverishing impact on the population of the North and East provinces and the villages bordering this region in the North Central and Uva provinces. These communities face multiple disadvantages of physical vulnerability, destroyed means of livelihood, and disruption in state provision of services and nonphysical aspects such as war trauma. The impoverishing impact is also felt in the rest of the country as the government shifts budgetary priorities away from welfare and development to deal with the strife. Meanwhile, investment and economic dynamism are adversely affected. Though the literature on the political and ethnic aspects of the conflict has been prolific, there is little that has been written on the impact of the conflict on poverty in the country. This issue is now being increasingly focused upon as relevant data becomes available and access to those regions is possible due to the ongoing ceasefire. 13ERD WORKING PAPER SERIES NO. 58 SECTION IV DISTRIBUTION IV. DISTRIBUTION A. Income Shares by Decile The research interest in relative poverty in Sri Lanka closely reflects trends in the international debate as well as the changing policy orientation of the country. Until the major policy changes in 1977, the policy orientation leaned heavily toward redistributive considerations and hence paid much attention to equity and welfare issues. Interest in income distribution and relative poverty was very high. During the 1980s this interest waned and has now all but disappeared from the economic debate. It is now rare that relative poverty is mentioned explicitly as the economic development plans are laid out. This is despite the fact that both the Department of Census and Statistics and the Central Bank regularly provide tabulations of income distribution (a proxy measure of relative poverty) in their respective publications. The following tables give the latest statistics describing the distribution of income within the population. TABLE 7 INCOME RECEIVERS INCOME (AVERAGE MONTHLY) AND SHARE OF INCOME BY INCOME RECEIVERS INCOME DECILE, 2002 DECILE (RS.) MEAN INCOME PERCENT All Deciles 7079 100 1 Less that 801 395 0.6 2 801-1800 1292 1.8 3 1801-2683 2255 3.2 4 2684-3514 3102 4.4 5 35154539 4021 5.7 6 4540-5617 5080 7.2 7 5618-7000 6318 9.3 8 7001-9000 7967 11.2 9 9001-13200 10835 14.9 10 More than 13200 29857 41.8 Source: Preliminary Report HIES 2002 (DCS 2002). 14 OCTOBER 2004 MONETARY POVERTY ESTIMATES IN SRI LANKA: SELECTED ISSUES NERANJANA GUNETILLEKE AND DINUSHKA SENANAYAKE TABLE 8 PER CAPITA INCOME PER MONTH BY INCOME DECILES, 2002 HOUSEHOLD INCOME DECILE (RS.) PER CAPITA INCOME (RS.) PERCENT OF SHARE All deciles 3141 100 1 Less than 3301 701 2.42 2 3301-4660 1087 3.75 3 4661-5823 1364 4.7 4 5824-7000 1647 5.68 5 7001-8387 1835 6.32 6 8388-10000 2115 7.29 7 10001-12688 2507 8.64 8 12689-16390 3288 11.33 9 16391-24225 4335 14.94 10 24226 and above 10136 34.93 Source: Preliminary Report HIES 2002 (DCS 2002). The income distribution situation prior to 2002 can be seen in Table 9. The data is for selected years in the three decades 1963 to 1996/97. TABLE 9 INCOME DISTRIBUTION BY DECILE, SELECTED YEARS 1963-1996/97 (PERCENT OF INCOME RECEIVERS) DECILE 1963 1973 78/79 81/82 86/87 90/91 96/97 2002 Lowest 1.17 1.80 1.19 1.17 1.09 1.9 1.3 0.6 Second 2.70 3.17 2.57 2.45 2.45 3.3 2.8 1.8 Third 3.56 4.38 3.57 3.41 3.40 4.3 3.9 3.2 Fourth 4.57 5.70 4.80 4.53 4.39 5.3 4.9 4.4 Fifth 5.55 7.10 5.93 5.53 5.69 6.4 6.1 5.7 Sixth 6.82 8.75 7.37 6.86 6.79 7.5 7.4 7.2 Seventh 8.98 10.56 9.10 8.54 8.37 9.2 9.1 9.3 Eighth 11.46 12.65 11.36 10.68 11.08 10.8 11.5 11.2 Ninth 16.01 15.26 15.36 14.87 15.37 14.9 15.7 14.9 Highest 39.24 29.98 38.73 41.93 41.37 36.5 37.3 41.8 Sources: CFS (CBSL 1964, 1974, 1981/82, and 1986/87); HIES (DCS 1997 and 2002). There is an emphatic improvement in distribution in the first decade covered by the data, as the share of the poorest of income receivers represented by the lowest three deciles in the distribution as a proportion of the richest represented by the highest decile, increased from 18.9 percent in 1963 to 31.2 percent in 1973. 15ERD WORKING PAPER SERIES NO. 58 There is clear deterioration from 1973 to 1981/83 as the share of the lowest three deciles as a proportion of the share of the topmost decile fell from 31.2 to 19.2 percent; a clear improvement from 1981/82 to 1990/91 from 19.2 to 26.0 percent; and an unambiguous deterioration from 1990/91 to 2002, from 26.0 percent in 1990/91, to 21.4 percent in 1995/96, to finally 13.4 percent in 2002. It is thus not easy to come to any firm conclusions regarding the trends in the relative position of the poor in the income distribution structure in Sri Lanka. However, looking only at the terminal years of the data, one can say that the relative position of the poor has deteriorated in the last four decades. The income of the poorest in the country fell from 18.9 percent of the income of the richest in 1963 to 13.4 percent in 2002. B. Sectoral Distribution The Lorenz curve type of analysis seems to confirm the above analysis. The Gini concentration coefficient is shown on Table 10 for several selected years for the period 1963-2002. TABLE 10 GINI COEFFICIENT OF CONCENTRATION FOR INCOME RECEIVERS SECTOR 1963 1973 78/79 81/82 86/87 90/91 95/96 2002 Urban 0.49 0.40 0.51 0.54 0.53 0.58 0.53 0.55 Rural 0.44 0.37 0.49 0.49 0.50 0.53 0.52 0.51 Estate 0.27 0.37 0.32 0.32 0.31 0.36 0.37 0.39 Sri Lanka 0.49 0.41 0.49 0.52 0.52 0.52 0.52 0.55 Sources: HIES (DCS various years); CFS (CBSL various years). The coefficient suggests a clear improvement in distribution from 1963 to 1973, as it fell from 0.49 to 0.41 over the 10-year period. However, it worsened therefrom, as it rose to 0.49 in 1978/79, to 0.52 over 1981/82-1995/96, and to 0.55 in 2002. It has been argued that the improvement in the first decade of the data came in the wake of the pro-welfare focus of the national policies up to 1977 and the deterioration thereafter as the aftermath of the policy restructuring toward economic growth. However the debate goes, the causes underpinning the change in income distribution remain to be unravelled. C. Consumption Distribution The same decline in the relative standing of the poor in Sri Lankan society can be seen in the distribution of consumption expenditure, as shown in Table 11. The consumption expenditure of the poorest—the three lowest deciles—as a percentage of the consumption expenditure of the richest—the topmost decile—fell from 42.9 percent in 1995/96 to 31.4 percent in 2002. SECTION IV DISTRIBUTION 16 OCTOBER 2004 MONETARY POVERTY ESTIMATES IN SRI LANKA: SELECTED ISSUES NERANJANA GUNETILLEKE AND DINUSHKA SENANAYAKE TABLE 11 MEAN HOUSEHOLD CONSUMPTION EXPENDITURE, BY EXPENDITURE DECILE, 1995/96 AND 2002 DECILES 1995/96 PERCENT 2002 PERCENT All Deciles 6525 100 13733 100 Lowest 1879 2.87 3305 2.4 Second 2834 4.34 5047 3.67 Third 3473 5.31 6294 4.58 Fourth 4033 6.17 7637 5.56 Fifth 4653 7.12 9010 6.56 Sixth 5360 8.2 10565 7.69 Seventh 6336 9.69 12532 9.12 Eighth 7719 11.81 15367 11.18 Nineth 10009 15.31 21014 15.29 Highest 19062 29.16 46645 33.94 Source: HIES 1995/96 and 2002 (DCS various years)). V. NONINCOME INDICATORS A. Education Data on education in Sri Lanka comes from the various sources of the Department of Census and Statistics. The Ministry of Education has a specialized database on students, teachers, and facilities of schools, by category, in all the country’s regions. The importance of education as a fundamental right of citizens has long been recognized by the Government of Sri Lanka. The recognition is operationalized in the form of state provision of universal free education. It is a measure of the success of the government’s educational program that the current literacy rate for males is 94 percent and for females 91 percent. There is near universal enrolment at the primary level. The relationship of this high level of achievement in the educational field with poverty eradication is, however less clear. From the various studies that have been conducted looking into the correlation between education levels and earning capacity, the general conclusion seems to be that there is no positive correlation between primary education and income generation capacity. Most poor households are literate and have on average eight years of education. However, secondary education and to a greater extent tertiary education have the potential to lift households out of poverty. The current debate on education in Sri Lanka focuses on the quality of education. The data on the performance of students at the three public examinations allows an analysis of quality to a certain extent. However, such an examination is handicapped by data gaps on teaching methods, curriculum, etc. 17ERD WORKING PAPER SERIES NO. 58 B. Health and Nutrition Health is a sector with one of the most varied databases. The data collected by the Department of Census and Statistics is complemented by Ministry of Health sources. Detailed data pertain to disease and epidemiology and the primary health care system, and include such information as doctor-patient ratios, hospitals per square area, beds per capita, etc. As in the case of education, the current research is focused strongly on the quality of health care. Nutrition poses a special problem in Sri Lanka. Malnutrition, especially among young children, continues to cast a very dark shadow on Sri Lanka’s human development achievements. Over 38 percent of the below five age group suffer from malnutrition. The disaggregated data on income show that over 90 percent of the bottommost quintile of income earners obtain less than the recommended calorie intake. Within this group the most serious problem lies with the urban sector households, and, in terms of occupational category, with agricultural workers. However, there is a high rate of prevalence among the nonpoor as well. Approximately 10 percent of children under five in the highest income quintile are malnourished. C. Employment Unemployment is an indicator of poverty as well as a key source of welfare. The data on employment comes mainly from the Central Bank’s Consumer Finances Survey, the Department of Census and Statistics’ Labour Force and Socio-Economic Surveys, and the subsequent Labour Force Surveys. The data is disaggregated by employment sectors, occupational type, region, gender, and age. Employment generation is currently at the top of the government’s agenda. There is particular concern for youth employment, a matter spurred by the youth insurgencies of 1971 and 1989/ 90, which was said to have been the result of frustration among the educated youth over the failure of the economy to meet the students’ higher aspirations. Attention is also being focused on such issues as mismatch, “who gains, who loses” in the sectoral growth process, the female bias of poststructural adjustment employment generation, the rise of child (10-14 age group) employment, changes in the quality of employment (based on the level in the occupational ladder), and the “informalization”’ of the labor market. For the immediate present, the focus of research is the restructuring of labor laws and wages. VI. CONCLUDING REMARKS The combined portfolio of quantitative data available through the Department of Census and Statistics, Central Bank of Sri Lanka, and other line ministry sources is fairly comprehensive. However, a major issue that arises is the comparability of the various data sets. The data sets collected by line ministries and departments are frequently supervised by DCS staff members but suffer from comparability problems mainly in terms of time periods used, spatial units, and at times definitions of the indicators. SECTION VI CONCLUDING REMARKS 24 OCTOBER 2004 MONETARY POVERTY ESTIMATES IN SRI LANKA: SELECTED ISSUES NERANJANA GUNETILLEKE AND DINUSHKA SENANAYAKE SELECTED REFERENCES Asian Development Bank (ADB), 2000. “Perceptions of the Poor: Poverty Consultations in Four Districts in Sri Lanka.” Manila, Philippines. Mimeo. ———, 2001. “Poverty Reduction in Sri Lanka: Maximising the Asian Development Bank’s Contribution.” Document prepared for the High Level Forum. Colombo. Alailima, P., 1986. “A Survey on Literature on Poverty.” Department of National Planning, Ministry of Finance and Planning, Colombo. Mimeo. ———, 1997. “Poverty and Unemployment in Sri Lanka.” Department of National Planning, Ministry of Finance and Planning, Colombo. Anand, S., and C. Harris, 1985. “Living Standards in Sri Lanka, 1973-1981/82: An Analysis of Consumer Finances Survey Data.” Mimeo. ———, 1990. “Food and Standard of Living: An Analysis Based on Sri Lankan Data.” In J. Dreze and A. K. Sen, eds., The Political Economy of Hunger. Oxford: Clarendon Press. Aturupane, D. C. H., 1999. “Poverty in Sri Lanka: Achievements, Issues and Challenges.” Report Prepared for the Workshop on Poverty Alleviation. Department of External Resources, Ministry of Finance and Planning. Bhalla, S., 1985. “Living Standards in Sri Lanka in the Seventies.” The World Bank, Washington, D.C. Mimeo. Bhalla, S., and P. Glewwe, 1986. “Growth and Equity in Developing Countries: A Reinterpretation of the Sri Lankan Experience.” World Bank Economic Review 1(1):35-63. Colombage, S. S., 1998. “Trends in Income Distribution.” In A. D. V. de S. Indraratna, eds., Fifty Years of Sri Lanka’s Independence—A Socio-Economic Review. Sri Lanka Institute of Social and Economic Studies, Colombo. Datt, G., and D. Gunewardena, 1997. Some Aspects of Poverty in Sri Lanka: 1985-90. Policy Research Working Paper WPS 1738, Analysis of Labour Force and Socio-Economic Survey of 1985/86 and Income and Expenditure Survey of 1990/91. The World Bank, Washington D.C. Deaton, A., 1981. Three Essays in a Sri Lankan Household Survey, Living Standard Measurement Study. Working Paper No. 11, The World Bank, Washington, D.C. Department of Census and Statistics, 1997. Household Income and Expenditure Survey. Colombo. ———, 2002. Preliminary Report on the Household Income and Expenditure Survey. Colombo. ———, 2003. Report on Household Income and Expenditure Survey. Colombo. ———, 2004. “The Department of Census and Statistics Announces the Official Poverty Line for Sri Lanka, Colombo.” Colombo. Edirisinghe, N., 1990. “Poverty in Sri Lanka: Its Extent, Distribution and Characteristics of the Poor.” In Analysis of Consumer Finances Survey of 1986/87. Paper submitted to the World Bank for the Sri Lanka Poverty Alleviation and Employment Project, Colombo. Glewwe, P., 1985. “The Distribution of Income in Sri Lanka in 1969-70 & 1980-81: A Decomposition Analysis.” Department of Agricultural Economics and Rural Sociology, Pennsylvania State University. Government of Sri Lanka, 2000. “Framework for Poverty Reduction In Sri Lanka.” Ministry of Finance, Colombo. Gunaratne, I., 1985. “Present Status of Knowledge on Poverty, Income Distribution and Welfare in Sri Lanka: A Statistical Review.” Colombo. Mimeo. ———, 1985a. “Measurement of Poverty in Sri Lanka.” A Paper Prepared for the World Bank-Central Bank, Sri Lanka Project on “Evaluation of Living Standards in Sri Lanka.” Mimeo. ———, 1985b. “Structural Characteristics of Employment, Unemployment and Underemployment of Household Poverty.” The World Bank, Washington, D.C. Mimeo. Gunewardena, D., 2000. “Consumption Poverty In Sri Lankan, 1985-1996: A Profile of Poverty Based on Household Survey Data (Analysis of the Income and Expenditure Survey of 1995/96).” Mimeo. 25ERD WORKING PAPER SERIES NO. 58 SELECTED REFERENCES ———, 2004a. Poverty Measurements: Meanings, Methods and Requirements. Centre for Poverty Analysis, Colombo. ———, 2004b. “Qualitative and Quantitative Approaches to Measuring Poverty: Issues and Challenges in the context of Sri Lanka.” In H. Gsaenger and M. Fernando, eds., Poverty Monitoring in Asia. Centre for Poverty Analysis, Colombo. Forthcoming. Hopkins, M. J. D., and T. Jogaratnam, 1990. The Socio-economic Dimensions of Poverty in Sri Lanka and Policy Implications. Development Alternatives, Inc., Washington, D.C. Isenman, P., 1980. “Basic Needs: The Case of Sri Lanka.” World Development 8:237-58. ———, 1986. “A Comment on “Growth and Equity in Developing Countries: A Reinterpretation of Sri Lankan Experience by Bhalla and Glewwe.” World Bank Economic Review 1(3):521-31. Khan, M. M., 1989. Analysis of Health, Nutrition and Poverty in Sri Lanka. USAID/DEVRES INC., Colombo. Korale, R. B. M., ed., 1987. “Income Distribution and Poverty in Sri Lanka.” Department of Census and Statistics, Colombo. Unpublished. Lakshman, W. D., 1997. “Income Distribution and Poverty.” In W. D. Lakshman, ed., Dilemmas of Development: Fifty Years of Economic Change in Sri Lanka. SLAE, Colombo. ———, 1998. Poverty in Sri Lanka: Measurement and Alleviation Exercises. SSP Working Paper. Intercooperation, Colombo. Marga Institute, 1981. “Analytical Description of Poverty in Sri Lanka.” Marga, Colombo. Ministry of Plan Implementation, 1997. “Poverty among Female Headed Households in Sri Lanka.” Colombo. ———, 1997. “Baseline for the Samurdhi Programme in Sri Lanka.” Colombo. Nanayakkara, A. G. W., 1994. “An Analysis of Poverty in Sri Lanka. (Analysis of Labour Force and Socio-Economic Survey of 1980/81 and 1985/86 and the Income and Expenditure Survey of 1990/91).” Sri Lanka Journal of Social Sciences 17(1&2, June/December)49-78. ———, 2000. “Future Priorities in Poverty Monitoring.” Paper presented at the Workshop on Poverty Reduction in Sri Lanka, 12-14 May, Kandalama. Nanayakkara, A. G. W., and H. A. G. Premaratne, 1987. “Food Consumption and Nutritional Levels.” In R. M. B. Korale, ed., Income Distribution and Poverty in Sri Lanka. Department of Census and Statistics. Colombo. Parker B., and T. Silva, 2000. “People’s Perceptions of Poverty: Social Issues in Sri Lankan Poverty.” Report prepared for the World Bank based on the preliminary findings of the SLIS qualitative survey, 1999-2000. Pradhan, M., 1999a. “Further Aspects of Poverty in Sri Lanka in 1996/1997 (Analysis of Consumer Finances Survey 1996/97).” Free University Amsterdam. Mimeo. ———, 1999b. “Note on Comparing CFS and HIES Data for Constructing Comparable Consumption Estimates.” Unpublished. Rathnayake, I., and J. Weerahewa, 2003. “Intra-Household Allocation of Calories among Low Income Households in Sri Lanka: Impact of Female Sources of Income.” In Progress Report of Project: Globalization and Distribution in Sri Lanka. MIMAP-IDRC. Micro Impacts of Macro Adjustment Policies, Ottawa. Ratnayake, R. M. K., 1998. “Poverty in Sri Lanka: Incidence and Poverty Reduction Strategies.” In A. D. V. de S. Indraratna, ed., Fifty Years of Sri Lanka’s Independence—A Socio-Economic Review. Sri Lanka Institute of Social and Economic Studies, Colombo. Rouse, C. E., 1990. A Study of the Poor in Sri Lanka. Internal Discussion Paper No. 165. The World Bank, Washington, D.C. Sahn, D., 1984. “An Analysis of Food Consumption and Expenditure Patterns in Sri Lanka.” International Food Policy Research Institute, Washinton D.C. and Community Systems Foundation, Michigan. Mimeo. ———, 1985. “Food Consumption Patterns and Parameters in Sri Lanka: the Causes and Control of Malnutrition.” International Food Policy Research Institute, Washington, D.C. Mimeo. ———, 1987. “Changes in Living Standards of the Poor in Sri Lanka During a Period of Macroeconomic Restructuring.” World Development 15(6):809-30. 26 OCTOBER 2004 MONETARY POVERTY ESTIMATES IN SRI LANKA: SELECTED ISSUES NERANJANA GUNETILLEKE AND DINUSHKA SENANAYAKE ———, 1988. “The Effect of Price and Income Changes on Food-energy Intake in Sri Lanka.” Economic Development and Cultural Change 36:315-40. Sarvananthan, M., 2003. “An Introduction to the Conflict Time Economy of the North & East Province of Sri Lanka.” International Centre for Ethnic Studies, Colombo. Shanmugaratnam, N., 1999. “Rural Poverty in Sri Lanka: A Synthesis of Preliminary Qualitative Studies.” Report to the World Bank, Norges Landbrukshogskole, Norway. Silva, T., 1998. “Sociological Perspectives relating to Selected Aspects of Poverty in Sri Lanka.” Paper presented to the Consultative Group, Poverty Alleviation Project, Ministry of Finance and Planning. Silva, T., et al., 1996. “Approaches to Poverty Alleviation in Sri Lanka.” Center for Community Health Studies. Preadeniya, Kandy. Tudawe, I., 2000. Review of Poverty Related Data and Data Sources in Sri Lanka. MIMAP-Sri Lanka Series No. 4. Institute of Policy Studies, Colombo. ———, 2001. Chronic Poverty and Development Policy in Sri Lanka: Overview Study. Chronic Poverty Research Centre Working Paper No. 9, Manchester Institute of Development Policy and Management, Manchester, U.K. UNDP, 1998. National Human Development Report—Sri Lanka. United Nations Development Program, Colombo. Vidyaratne, S., and K. G. Tilakaratne, 2003. “Sectoral and Provincial Poverty Lines for Sri Lanka.” Department of Census and Statistics, Colombo. Visaria, P., 1981. Some Aspects of Relative Poverty in Sri Lanka 1969–1970. World Bank Staff Paper, No. 461, The World Bank, Washington, D.C. World Bank, 1995. Sri Lanka Poverty Assessment, Report No. 13431-CE. World Bank, Colombo. ———, 2000. “Sri Lanka: Recapturing Missed Opportunities.” World Bank Country Report. 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Pernia, January 1991 No. 55 Financial Sector and Economic Development: A Survey —Jungsoo Lee, September 1991 No. 56 A Framework for Justifying Bank-Assisted Education Projects in Asia: A Review of the Socioeconomic Analysis and Identification of Areas of Improvement —Etienne Van De Walle, February 1992 No. 57 Medium-term Growth-Stabilization Relationship in Asian Developing Countries and Some Policy Considerations —Yun-Hwan Kim, February 1993 No. 58 Urbanization, Population Distribution, and Economic Development in Asia —Ernesto M. Pernia, February 1993 No. 59 The Need for Fiscal Consolidation in Nepal: The Results of a Simulation —Filippo di Mauro and Ronald Antonio Butiong, July 1993 No. 60 A Computable General Equilibrium Model of Nepal —Timothy Buehrer and Filippo di Mauro, October 1993 No. 61 The Role of Government in Export Expansion in the Republic of Korea: A Revisit —Yun-Hwan Kim, February 1994 No. 62 Rural Reforms, Structural Change, and Agricultural Growth in the People’s Republic of China —Bo Lin, August 1994 No. 63 Incentives and Regulation for Pollution Abatement with an Application to Waste Water Treatment —Sudipto Mundle, U. Shankar, and Shekhar Mehta, October 1995 No. 64 Saving Transitions in Southeast Asia —Frank Harrigan, February 1996 No. 65 Total Factor Productivity Growth in East Asia: A Critical Survey —Jesus Felipe, September 1997 No. 66 Foreign Direct Investment in Pakistan: Policy Issues and Operational Implications —Ashfaque H. Khan and Yun-Hwan Kim, July 1999 No. 67 Fiscal Policy, Income Distribution and Growth —Sailesh K. Jha, November 1999 Perspectives for the Coming Decade —Ulrich Hiemenz, March 1982 No. 8 Petrodollar Recycling 1973-1980. Part 1: Regional Adjustments and the World Economy —Burnham Campbell, April 1982 No. 9 Developing Asia: The Importance of Domestic Policies —Economics Office Staff under the direction of Seiji Naya, May 1982 No. 10 Financial Development and Household Savings: Issues in Domestic Resource Mobilization in Asian Developing Countries —Wan-Soon Kim, July 1982 No. 11 Industrial Development: Role of Specialized Financial Institutions —Kedar N. Kohli, August 1982 No. 12 Petrodollar Recycling 1973-1980. Part II: Debt Problems and an Evaluation of Suggested Remedies —Burnham Campbell, September 1982 No. 13 Credit Rationing, Rural Savings, and Financial Policy in Developing Countries —William James, September 1982 No. 14 Small and Medium-Scale Manufacturing 33 Establishments in ASEAN Countries: Perspectives and Policy Issues —Mathias Bruch and Ulrich Hiemenz, March 1983 No. 15 Income Distribution and Economic Growth in Developing Asian Countries —J. Malcolm Dowling and David Soo, March 1983 No. 16 Long-Run Debt-Servicing Capacity of Asian Developing Countries: An Application of Critical Interest Rate Approach —Jungsoo Lee, June 1983 No. 17 External Shocks, Energy Policy, and Macroeconomic Performance of Asian Developing Countries: A Policy Analysis —William James, July 1983 No. 18 The Impact of the Current Exchange Rate System on Trade and Inflation of Selected Developing Member Countries —Pradumna Rana, September 1983 No. 19 Asian Agriculture in Transition: Key Policy Issues —William James, September 1983 No. 20 The Transition to an Industrial Economy in Monsoon Asia —Harry T. Oshima, October 1983 No. 21 The Significance of Off-Farm Employment and Incomes in Post-War East Asian Growth —Harry T. Oshima, January 1984 No. 22 Income Distribution and Poverty in Selected Asian Countries —John Malcolm Dowling, Jr., November 1984 No. 23 ASEAN Economies and ASEAN Economic Cooperation —Narongchai Akrasanee, November 1984 No. 24 Economic Analysis of Power Projects —Nitin Desai, January 1985 No. 25 Exports and Economic Growth in the Asian Region —Pradumna Rana, February 1985 No. 26 Patterns of External Financing of DMCs —E. Go, May 1985 No. 27 Industrial Technology Development the Republic of Korea —S.Y. Lo, July 1985 No. 28 Risk Analysis and Project Selection: A Review of Practical Issues —J.K. Johnson, August 1985 No. 29 Rice in Indonesia: Price Policy and Comparative Advantage —I. Ali, January 1986 No. 30 Effects of Foreign Capital Inflows on Developing Countries of Asia —Jungsoo Lee, Pradumna B. Rana, and Yoshihiro Iwasaki, April 1986 No. 31 Economic Analysis of the Environmental Impacts of Development Projects —John A. Dixon et al., EAPI, East-West Center, August 1986 No. 32 Science and Technology for Development: Role of the Bank —Kedar N. Kohli and Ifzal Ali, November 1986 No. 33 Satellite Remote Sensing in the Asian and Pacific Region —Mohan Sundara Rajan, December 1986 No. 34 Changes in the Export Patterns of Asian and Pacific Developing Countries: An Empirical Overview —Pradumna B. Rana, January 1987 No. 35 Agricultural Price Policy in Nepal —Gerald C. Nelson, March 1987 No. 36 Implications of Falling Primary Commodity Prices for Agricultural Strategy in the Philippines —Ifzal Ali, September 1987 No. 37 Determining Irrigation Charges: A Framework —Prabhakar B. Ghate, October 1987 No. 38 The Role of Fertilizer Subsidies in Agricultural Production: A Review of Select Issues —M.G. Quibria, October 1987 No. 39 Domestic Adjustment to External Shocks in Developing Asia —Jungsoo Lee, October 1987 No. 40 Improving Domestic Resource Mobilization through Financial Development: Indonesia —Philip Erquiaga, November 1987 No. 41 Recent Trends and Issues on Foreign Direct Investment in Asian and Pacific Developing Countries —P.B. Rana, March 1988 No. 42 Manufactured Exports from the Philippines: A Sector Profile and an Agenda for Reform —I. Ali, September 1988 No. 43 A Framework for Evaluating the Economic Benefits of Power Projects —I. Ali, August 1989 No. 44 Promotion of Manufactured Exports in Pakistan —Jungsoo Lee and Yoshihiro Iwasaki, September 1989 No. 45 Education and Labor Markets in Indonesia: A Sector Survey —Ernesto M. Pernia and David N. Wilson, September 1989 No. 46 Industrial Technology Capabilities and Policies in Selected ADCs —Hiroshi Kakazu, June 1990 No. 47 Designing Strategies and Policies for Managing Structural Change in Asia —Ifzal Ali, June 1990 No. 48 The Completion of the Single European Community Market in 1992: A Tentative Assessment of its Impact on Asian Developing Countries —J.P. Verbiest and Min Tang, June 1991 No. 49 Economic Analysis of Investment in Power Systems —Ifzal Ali, June 1991 No. 50 External Finance and the Role of Multilateral Financial Institutions in South Asia: Changing Patterns, Prospects, and Challenges —Jungsoo Lee, November 1991 No. 51 The Gender and Poverty Nexus: Issues and Policies —M.G. Quibria, November 1993 No. 52 The Role of the State in Economic Development: Theory, the East Asian Experience, and the Malaysian Case —Jason Brown, December 1993 No. 53 The Economic Benefits of Potable Water Supply Projects to Households in Developing Countries —Dale Whittington and Venkateswarlu Swarna, January 1994 No. 54 Growth Triangles: Conceptual Issues and Operational Problems —Min Tang and Myo Thant, February 1994 No. 55 The Emerging Global Trading Environment and Developing Asia —Arvind Panagariya, M.G. Quibria, and Narhari Rao, July 1996 No. 56 Aspects of Urban Water and Sanitation in the Context of Rapid Urbanization in Developing Asia —Ernesto M. Pernia and Stella LF. Alabastro, September 1997 No. 57 Challenges for Asia’s Trade and Environment —Douglas H. Brooks, January 1998 No. 58 Economic Analysis of Health Sector ProjectsA Review of Issues, Methods, and Approaches —Ramesh Adhikari, Paul Gertler, and Anneli Lagman, March 1999 No. 59 The Asian Crisis: An Alternate View —Rajiv Kumar and Bibek Debroy, July 1999 No. 60 Social Consequences of the Financial Crisis in Asia —James C. Knowles, Ernesto M. Pernia, and Mary Racelis, November 1999